Correlation Between Chevron Corp and Axim Biotechnologies

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Axim Biotechnologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chevron Corp and Axim Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chevron Corp and Axim Biotechnologies, you can compare the effects of market volatilities on Chevron Corp and Axim Biotechnologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chevron Corp with a short position of Axim Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Axim Biotechnologies.

Diversification Opportunities for Chevron Corp and Axim Biotechnologies

-0.76

Correlation Coefficient

Chevron Corp  Axim Biotechnologies

Pay attention - limited upside

The 3 months correlation between Chevron and Axim is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Axim Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axim Biotechnologies and Chevron Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chevron Corp are associated (or correlated) with Axim Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axim Biotechnologies has no effect on the direction of Chevron Corp i.e., Chevron Corp and Axim Biotechnologies go up and down completely randomly.

Pair Corralation between Chevron Corp and Axim Biotechnologies

Considering the 90-day investment horizon Chevron Corp is expected to generate 2.31 times less return on investment than Axim Biotechnologies. But when comparing it to its historical volatility, Chevron Corp is 12.79 times less risky than Axim Biotechnologies. It trades about 0.05 of its potential returns per unit of risk. Axim Biotechnologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.60  in Axim Biotechnologies on September 3, 2024 and sell it today you would lose (1.40) from holding Axim Biotechnologies or give up 87.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  Axim Biotechnologies

Chevron Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Axim Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axim Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Chevron Corp and Axim Biotechnologies

The main advantage of trading using opposite Chevron Corp and Axim Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Axim Biotechnologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Axim Biotechnologies will offset losses from the drop in Axim Biotechnologies' long position.

The idea behind Chevron Corp and Axim Biotechnologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.